United Overseas Bank Limited · SGX:U11
United Overseas Bank — FY2002 Earnings Presentation
29 slides from United Overseas Bank's earnings presentation, Feb 28, 2003
Slide 1: Building a Premier Regional Bank – Analysts' Briefing Full Year 2002 Results
Building a Premier Regional Bank Analysts’ Briefing Full Year 2002 Results Address by Mr Wee Ee Cheong Deputy Chairman & President 28 February 2003 Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of the prese
Slide 2: Panel Members
Panel Members Mr Wee Ee Cheong Deputy Chairman & President Mr Samuel Poon SEVP, Institutional Banking Mr Terence Ong SEVP, Global Treasury / Asset Mgt Mr Kuek Tong Au EVP, Corporate Services Ms Sim Puay Suang EVP, Personal Financial Services Mr David Loh EVP, Risk Management Ms Susan H
Slide 3: Agenda
Agenda Post-Integration Post-Integration Cost Cost Savings Savings Financial Financial Review Review CAR CAR and and Asset Asset Quality Quality // Provisioning Provisioning Domestic Domestic & & Regional Regional Update Update 3
Slide 4: Post-Integration Cost Savings
Post-Integration Cost Savings Cost Savings Exceeded Expectations Achieved cost savings of $195mn through better execution Above our estimate of $190mn On track to realise target annual cost savings of $250mn in 2003 4
Slide 5: Agenda
Agenda Post-Integration Post-Integration Cost Cost Savings Savings Financial Financial Review Review CAR CAR and and Asset Asset Quality Quality // Provisioning Provisioning Domestic Domestic & & Regional Regional Update Update 5
Slide 6: 2002 – A Challenging Year
2002 – A Challenging Year Weak market sentiments & sluggish loan demand 2nd half further dampened by terrorist attack in Bali & lingering geopolitical risk Strong downward pressure on margins as banks compete for housing loan pie Full year margins lower than 1st half, but improved 20 basis p
Slide 7: Overall Impact Cushioned by OUB Acquisition
Overall Impact Cushioned by OUB Acquisition Enlarged customer base and loan base doubled Enhanced leadership position in key market segments Expanded product offering and increased distribution reach Achieved operational efficiency & excellence through effective use of IT, optimisation of de
Slide 8: Strength in Cost Management
Strength in Cost Management Balance between Managing Cost & Investing for the Future Consistent strength in cost management places us in good stead Do not compromise investments in strategic areas Ready to capitalise on opportunities when economy improves View ongoing investments in strategi
Slide 9: Net Profit After Tax (NPAT)
Net Profit After Tax (NPAT) Delivering a Set of Respectable Results NPAT grew 15.1% to $1.064bn year-on-year Achieved through swift integration, harnessing benefits of acquisition, & remaining focused on customers & business $913mn $925mn $1.064bn $408 $505 $455 $470 $591 $473 FY00 FY01 FY02 1st
Slide 10: Return on Equity
Return on Equity Temporary Setback in Cash ROE Due to enlarged capital base post-acquisition 13.5% 11.3% 9.8% FY00 FY01 FY02 10
Slide 11: Offshore Profit Contribution
Offshore Profit Contribution Reaping Rewards from our Regional Efforts Offshore (Including ACU) Onshore 84.0% 70.8% 63.7% 36.3% 29.2% 16.0% FY00 FY01 FY02 11
Slide 12: Income Mix
Income Mix Continue Efforts to Build Up Non-Interest Income Non Interest Income Interest Income 70.4% 63.0% 64.3% 37.0% 35.7% 29.6% FY00 FY01 FY02 12
Slide 13: Income Mix
Income Mix Continue Efforts to Build Up Non-Interest Income Non Interest Income Interest Income 73.8% 67.3% 32.7% 26.2% 1H02 2H02 13
Slide 14: Expense to Income Ratio
Expense to Income Ratio Driven by integration Cost Savings & Good Cost Discipline Continue to explore ways to streamline operations for efficiency ISO 9000 : 2001 certification for operations sets the stage for re- engineering & regional hubbing down the road 39.5% 39.3% 34.9% FY00 FY01 FY02 14
Slide 15: Sustained Investments in Information Technology (IT)
Sustained Investments in Information Technology (IT) IT a Key Business Enabler IT expenses as proportion of total expenses rose 1.1 percentage pts from 17.5% to 18.6% Initiated Global Hubbing Project as part of plan to put regional infrastructure in place Adopt business driven approach for str
Slide 16: Agenda
Agenda Post-Integration Post-Integration Cost Cost Savings Savings Financial Financial Review Review CAR CAR and and Asset Asset Quality Quality // Provisioning Provisioning Domestic Domestic & & Regional Regional Update Update 16
Slide 17: Capital Adequacy Ratio (CAR)
Capital Adequacy Ratio (CAR) Manage Capital Efficiently in Line with Growth Strategies Currently at 15.3% Repayment of USD sub-debts in May & September 2002 19.8% 18.5% 2.7% 15.3% 6.7% 3.1% 17.1% 11.8% 12.2% FY00 FY01 FY02 Tier 1 Tier 2 17
Slide 18: Asset Quality and Provisioning
Asset Quality and Provisioning Asset Quality NPLs improved by 4.8% to $5.68bn General provisions not reversed Coverage increased from 55.9% to 61.7% Provisioning Loans provisions higher in 2H02 than 1H02 Impact mainly from drop in collateral values 18
Slide 19: Agenda
Agenda Post-Integration Post-Integration Cost Cost Savings Savings Financial Financial Review Review CAR CAR and and Asset Asset Quality Quality // Provisioning Provisioning Domestic Domestic & & Regional Regional Update Update 19
Slide 20: Singapore – Continue to Focus on Consumer & SME Markets
Singapore Continue to Focus on Consumer & SME Markets Adopt customer centric approach to build total & long term relationship with customers Enhance value proposition for customers rather than compete based on pricing Large customer base, market share & distribution network Improve profitabi
Slide 21: Consumer – Total Relationship & Value-Focused Strategy
Consumer Total Relationship & Value-Focused Strategy Targeting Mass Affluent Segment Extensive renovation of branch network targeting at mass affluent market and fulfillment of investment needs Deploy CRM capabilities to improve customer loyalty and entrench customer relationships Expand range
Slide 22: Strength in Customer Relationship Management
SMEs Strength in Customer Relationship Management Remain a committed player Leverage on stable management and strength in customer relationship management as we : − Tap & foster relationships with customers in selectively new and growth industries − Deepen relationships through multiple product
Slide 23: ASEAN – Malaysia and Thailand
ASEAN Malaysia - Growing in significance as a key contributor Leverage on window of opportunity as local banks consolidate Strengthen fee-based business such as bancassurance Aspiring to be a prominent player in the domestic capital market Thailand – Next major contributor to the Group Ended
Slide 24: ASEAN – Philippines and Indonesia
ASEAN Philippines – Returning operations to profitability Focus on cost and liability management Selective loan growth & investments in high grade sovereign papers Indonesia – Positioning for steady expansion 99% owned subsidiary and branch network reinforces commitment Increase emphasis on
Slide 25: Australia
Australia Increasing profit contribution Active participation in loan syndications to top tier corporates Continue to expand project financing as arranger, sub-arranger or underwriter 25
Slide 26: Greater China – Expanding Scope of Business & Network
Greater China Expanding Scope of Business & Network Significant network in Greater China with a total of 12 offices Beef up corporate business − Follow existing customers in ASEAN as they expand into China − Leverage on our network to serve Greater China customers as they expand beyond Greater C
Slide 27: Greater China
Greater China Multi-pronged approach − Eg. Use private equity in addition to pure lending where relevant − Helps deepen understanding of domestic markets while containing risks Lay foundation for long term growth by investing in people, systems & infrastructure Besides organic growth, open to
Slide 28: Outlook – Moderated Outlook for 2003
Outlook Moderated Outlook for 2003 Uncertainty surrounding the war has not abated Expect to see slower growth, but global environment to look more positive in 2nd half Build regional infrastructure and branding to further expand regional presence 28
Slide 29: Committed to the Region
Committed to the Region Long term player with intimate understanding of the region Region continues to present pockets of opportunities Strategic initiatives will position us to ride on next wave of opportunity as economy improves Our Our Vision Vision ““ To To be be aa Premier Premier Bank Ba